New York’s Gov. Paterson Signs Ground-Breaking Supplier Diversity Legislation

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PatersonNew York Governor David A. Paterson signed groundbreaking legislation this week to expand state procurement opportunities for minority- and women-owned businesses. The new legislation, a package of four bills known as the New York State Business Diversity Act, comes as newly released U.S. Census Bureau figures show a dramatic increase in the number of such businesses both nationwide and in New York.

On Tuesday, Census reported preliminary results from its 2007 Survey of Business Owners that show the number of minority-owned business enterprises in the country increasing 45.6 percent between 2002 and 2007. In New York State, the report shows, firms owned by minorities numbered 537,838 in 2007 and had receipts of $80 billion, up from 422,879 (27.2 percent) and $50.5 billion (58.5 percent), respectively, in 2002.

For example, the number of Black-owned firms in the state jumped to 204,093 in the same period, a 57.8 percent increase from 129,329 in 2002, while their receipts soared 72.5 percent to $12.9 billion in 2007 from $7.5 billion in 2002. While their growth was not as robust as that their Black-owned counterparts, the number and receipts of the state’s Hispanic-owned firms also widened in the five-year period. Such firms increased 18.4 percent in number to 193,255 in 2007 from 163,588 in 2002 and showed receipts of $18.3 billion in 2007, a 48.4 percent spike from $12.3 billion in 2002.
 
Women-owned firms in the state, which include those owned by women of all racial groups, totaled 594,447 in 2007 against 505,077 in 2002, a 17.7 percent increase. Their 2007 receipts were $84.4 billion, a 19.1 percent jump from $70.8 billion in 2002. 

The legislation that Gov. Paterson signed on Thursday is designed to facilitate access to state contracts for these and other ethnic-minority businesses, ultimately creating badly needed jobs. “There is still much work to be done to correct disparities in government contracting. By improving equity in the State procurement process and facilitating greater access for minority and women-owned business enterprises, we help businesses thrive and we will help our State recover from recession,” the governor said.
 
The bills he signed into law are:

Governor’s Program Bill No. 297 (S.8312/ A.11525). This law raises the cap on discretionary purchases that a State agency can award to MWBEs or small businesses to $200,000 from $100,000, subject to the agency’s internal controls, but not based on full-blown competitive procurement procedures.

Governor’s Program Bill No. 298 (S.8313/ A.11526). Expands contracting practices of public authorities granting increased opportunities for MWBE participation. In addition, this law requires that the procurement guidelines for each State public authority include the designation of one or more senior staff to oversee the authority’s MWBE program and requires that procurements be conducted to achieve the authority’s MWBE goals to the maximum feasible extent.

Governor’s Program Bill No. 299 (S.8314/A.11527): Expands and strengthens the State’s program for MWBE contracting and authorizes a new, more thorough disparity study before the provisions relating to the MWBE program expires in 2014, including in-depth review of contractors’ hiring and promotional practices. This law will also create the position of chief diversity officer to oversee the MWBE program and diversity issues in the workforce from within the Executive Chamber.

Emerging Investment Managers Bill (S.6888/ A.9976): Addresses entities that are not executive agencies, but which control large pools of money for investment — the Comptroller, the State Insurance Fund and the Deferred Compensation Board. The law will provide emerging investment managers the ability to invest with MWBE financial institutions and to adopt a strategy that motivates investments in underserved regions of the State.

State Senator Ruth Hassell-Thompson, architect of the four bills, said: “These bills intend to bring our State procurement process into the 21st Century by removing barriers that have historically prevented women and persons of color from reaching full economic parity with respect to contracting opportunities in this State.”

Hassell-Thompson, a former New York City Council member, prior to holding elected office was president and CEO of Whart Development Co., Inc., a real estate development company that also provided consultant services to small and developing businesses. She noted that by the year 2040, more than 50 percent of the state’s population would be made up of minority groups, a reality for which large corporations already have begun to prepare by diversifying their supplier pools.

“New York State has lagged behind even the private sector with respect to its contract expenditures for MWBEs,” she said. “The four-bill package ensures that the State’s fiduciary-controlled entities, public authorities and agencies have developed and codified a strategy aimed at inclusion and meaningful participation of MWBEs across New York State. These bills go a long way to ensure that best-practices are institutionalized and that contracting opportunities are readily available for qualified MWBEs.”

The new legislation is the culmination of the governor’s push to open state contract opportunities to MWBEs. In 2008, he issued Executive Order No. 10 establishing the Task Force on Minority and Women Business Enterprises. MWBE participation in state procurement subsequently quadrupled, the governor’s office reports. The office says firms involved with investment banking and the issuance of debt went to 23.9 percent MWBE currently from 4.2 percent MWBE in 2007; MWBEs have seen an increase of $162 million in revenue from prior year levels; and 13 percent of stimulus transportation projects have gone to disadvantaged business enterprises, a total of $146 million and an estimated 3,500 jobs created or saved.
 
While the task force’s recommendations were incorporated into the governor’s three Program Bills, the entire package comprising the New York State Business Diversity Act addresses MWBE disparities in government contracting that were outlined in a report commissioned by the New York State Department of Economic Development. The report, “The State of Minority and Woman Owned Business Enterprise: Evidence from NY,” was made public in April.

“We have made tremendous progress under this governor, yet we have had to build our program without the tools and legal authority necessary for maximum success. This legislation provides us with the ability to build a more robust MWBE program that will rival the best of any state in the nation,” said Michael Jones-Bey, executive director of the Division of Minority and Women-Owned Business Development.